These information presented at North Company throughout 2017: Jan. 1 Bank of Ame
ID: 2550348 • Letter: T
Question
These information presented at North Company throughout 2017:
Jan. 1 Bank of America agree to lend North Co. $41,000 and carry a 9% interest rate for one year maturing on January 1, 2018.
Jan. 2 North Co. accepted a 4-month, 8% note from Panda Company in payment of Panda’s $1,200 account.
Jan. 3 North Co. wrote off as uncollectible the accounts of Wooden Corporation ($450) and Zajel Company ($280).
Jan. 11 North Co. sold for $28,000 to Fire Co. on account inventory that cost $19,600. Terms 2/10, n/30.
Jan. 15 North Co. sold inventory that cost $700 to Mark Harries for $1,000. Harries charged this
amount on his Visa Bank card. The service fee charged North Co. by the bank is 3%.
Jan. 17 Fire Co. returns merchandise worth $1000.
Jan. 24 North Co. received payment in full ($280) from Zajel Company on the account written off on
January 3.
Jan. 25 receives $22,900 payment from Fire Co.
On May 1, 2017, North Co. purchased equipment for $21,200 plus sales taxes of $1,600 (all paid in cash).
July. 1 North Co. sold for $3,500 equipment which originally cost $5,000. Accumulated depreciation on
this equipment at January 1, 2017, was $1,800; 2017 depreciation prior to the sale of the equipment was
$450.
Aug. 1 North Co. sold for $440,000 cash, inventory and collected $28,600 in sales taxes.
Sep 30, North Co. sold on account $9,000 of inventory that cost $6,300.
Nov. 30, the payroll for the month consists of salaries and wages of $60,000. All salaries and wages are
subject to 7.65% FICA taxes. A total of $8,900 federal income taxes are withheld. The salaries and wages
are paid on Jan 1, 2018.
Dec. 1 North Co. received an advanced amount of $6,000 rent for 3 months.
Adjustment data:
North Co. estimates that uncollectible accounts receivable at year-end is $3,500.
The cost of the building $150,000 is being depreciated using the straight-line method over 30 years.
The salvage value is $30,000.
The car owned this year is being depreciated using double –declining-balance method over
5 years by using 20% rate for depreciate the car. The car cost $50,000.
The equipment purchased on May 1, 2017, is being depreciated using the straight-line method over 5
years, with a salvage value of $1,800.
The patent was acquired on January 1, 2017, $9,000 and has a useful life of 10 years from that date.
The unearned rent revenue of $6,000 was received on December 1, 2017, for 3 months’ rent.
The short-term note is dated January 1, 2017, and carry a 9% interest rate.
Explanation / Answer
In the books of North Co. :
Contd.
Date Account Titles Debit Credit 2017 $ $ Jan 1 Cash 41,000 Note Payable 41,000 Jan 2 Note Receivable 1,200 Accounts Receivable 1,200 Jan 3 Allowance for Doubtful Accounts 730 Accounts Receivable: Wooden Corporation 450 Accounts Receivable: Zajel Company 280 Jan 11 Accounts Receivable : Fire Co. 28,000 Sales 28,000 Jan 11 Cost of Goods Sold 19,600 Inventory 19,600 Jan 15 Cash 970 Credit Card Charges 30 Sales 1,000 Jan 15 Cost of Goods Sold 700 Inventory 700 Jan 17 Sales Returns and Allowances 1,000 Accounts Receivable: Fire Co. 1,000 Jan 17 Inventory ( 19,600 / 28,000 x 1,000) 700 Cost of Goods Sold 700 Jan 24 Accounts Receivable 280 Allowance for Doubtful Accounts 280 Jan 24 Cash 280 Accounts Receivable 280 Jan 25 Cash 22,900 Accounts Receivable: Fire Co. 22,900 May 1 Equipment 22,800 Cash 22,800 May 1 Cash 1,232 Note Receivable 1,200 Interest Revenue 32 July 1 Depreciation Expense 450 Accumulated Depreciation: Equipment 450 July 1 Cash 3,500 Accumulated Depreciation : Equipment 2,250 Equipment 5,000 Gain on Disposal of Equipment 750 Aug 1 Cash 468,600 Sales Tax Payable 28,600 Sales 440,000Related Questions
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